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"Consumers are evolving and they want to consume dairy in a new form. This partnership is about creating new categories, new products...We are very excited that we are entering a space where consumers are indulging three or four times a day," Future Group chief executive officer Kishore Biyani said, while adding that 10-12 per cent of the group's small store business comes from dairy.

The companies would be focusing more on value added dairy segment that is expected to grow 50 per cent faster than the dairy sector in the next seven years.

Milk consumption in the country is also expected to increase by 42 per cent from 196 billion litres at present to 278 billion litres in the next seven years.

"It was a different market then but the market has evolved now," Fonterra chief operating officer Lukas Paravicini said.

"It (Fonterra-Future JV) will allow us to prepare the groundwork and make the most of our expertise as we enter the world's largest and fastest growing market. Consumer demand for dairy in India over the next seven years is set to increase to 82 billion litres, seven times the forecast growth for China," he added.

Future Group that also operates a dairy business through Nilgiris would be merging the business into the joint venture.

"We will have a single dairy company. We will be building a new brand where everything will get folded in. Fonterra Future is going to build a brand in India, which will be a dairy brand and that brand will encompass whatever we do currently also," Biyani said.

"If we are able to open 10,000 stores, it will be around Rs 15,000-20,000 crore and that is an opportunity for them to take ahead. Our current business of Rs 140-150 crore of Nilgiris, definitely will fold into that," he added.

Paravicini said the initial stages of partnership will focus on product development, prioritising the geographies and channels.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)